Some Realism about Parochialism: The Economic Analysis of Legal Ethics

Abstract

This essay reviews Professor Randal Graham's Legal Ethics, the first teaching text to present legal ethics from an explicitly economic point of view. The essay argues that Graham is right to focus on an economic approach, which has not been used as much to analyze legal ethics as it has been to analyze other subjects, such as antitrust, corporations, securities, intellectual property, and tort law. The essay argues that Graham is too soft on professional ethics. He defends, implicitly or explicitly, professional licensing, administrative discipline, and the attorney-client privilege, which have only weak (if any) support in economic theory. For example, Professor Graham employs the lemons model defense of licensing, which is a poor fit for a profession in which reputation plays such an important role. The essay concludes by acknowledging that economic analysis, and utilitarianism in general, does not tell us where preferences come from. Nor, with some trivial exceptions that need no special ethical rules (don't steal, etc.), does it say whether professors should try to alter students' preferences. There is an irreducible normative element to legal ethics, though not a single irreducible approach that could actually be taught to students. The essay concludes that economic analysis should be the dominant approach to legal ethics, though not the only one, and that it should be applied rigorously to the assumptions and pretensions of the profession.